U.S. v. Loeb

Full title: UNITED STATES OF AMERICA v. HAROLD MOLAISON DAVID LOEB

Court: United States District Court, E.D. Louisiana

Date published: May 17, 2005

Criminal Action No. 04-223 Section "K" (E.D. La. May. 17, 2005)

Opinion

Criminal Action No. 04-223 Section "K".

May 17, 2005

ORDER AND REASONS ON OBJECTION TO TESTIMONY OF CHARLES PLATTSMIER

STANWOOD DUVAL, District Judge

The government has apprised the Court it intends to call Charles "Chuck" Plattsmeir, Chief Disciplinary Counsel, State of Louisiana, Office of Disciplinary Counsel. The nature of the testimony is to the effect that it is unethical for an attorney to obtain a present interest in the subject matter of the litigation from a client under the provisions of Rule 1.8(j) of the Rules of Professional Conduct. The defendants object to this testimony, inter alia, on the grounds of relevancy, undue prejudice, being in contravention of Fed.R.Evid. 404(b) and that the contingency fee contract does in fact lawfully grant an interest in the subject pursuant to La.Rev.Stat. 37: 218. Based on the reasons that follow,

IT IS ORDERED that the objection is OVERRULED.

The lynchpin of the defense to the government's charges is that the defendants acquired a possessory interest or other equitable interest in the property which was the subject of the litigation by virtue of the various contingency fee agreements with their respective clients. Alternatively, they argue that the defendants had a good faith reason to believe that such rights flowed from these agreements. Therefore, the legal effects of the contingency fee agreements are at the heart of the case. Also, what the defendants intended at the time of the signing of these agreements is likewise at the heart of the case.

Certainly, testimony that Rule 1.8 prohibits such an immediate vesting is relevant, and the Court finds that such relevance is not outweighed by its prejudicial effect. Moreover, the Court holds that Rule 404(b) is not applicable. One, this is not character evidence of the type prohibited by the rule. Additionally, even if it were, it does not apply to evidence which is intrinsic to the charged offense. United States v. Williams, 900 F.2d 823 (5^th Cir. 1990) (noting distinction between 404(b) evidence and intrinsic offense evidence). Obviously, the confection of the fee agreements are intrinsic to the charged offense.

The Supreme Court of the State of Louisiana in Saucier v. Hayes Dairy Produce, Inc., 373 So. 2d 102 (La. 1979) (on rehearing) discussed the relationship between La.Rev.Stat. 37:218 and Disciplinary Rule 5-103 (now Professional Rule of Conduct 1.8(j)). The court held;

Because the Disciplinary Rules prohibit the acquisition of an absolute ownership interest in the client's claim prior to his performance of all or substantially all the legal services, the "interest in the subject matter of the suit, proposed suit or claim" safeguarded by the statue is, we believe, no more than a privilege granted to aid the attorney's collection of a fully earned fee out of the fund which the satisfaction of the client's claims yields.

Id. at 117. The jury is entitled to know any prohibition which might have affected the state of mind or the intent of the defendants. The Court will give a limiting instruction that this evidence should be considered along with all the other evidence in determining whether the defendants had a good faith belief that they had a possessory or equitable interest in the property and that merely because an action is unethical does not mean that defendants acted illegally in the context of this prosecution.